Smart Orders: Trailing Stop Loss: Average Entry and Follow Take Profit
The smart Trailing Stop Loss orders: Average Entry and Follow Take Profit are very similar. Both offer protection for the remainder of your position once the first Take Profit order has been reached.
Description
Comparison between TSL: Average Entry Price and TSL: Follow Take Profit
Adding a TSL: AEP or FTP to your smart order
Execution
TSL: AEP
What you need to know for TSL: AEP
TSL: Follow Take Profit
What you need to know for TSL: FTP
Once TP1 is filled, the Stop Loss moves to the Average Entry Price.
On some platforms this is called “move stop loss to breakeven”.
Both types are suitable when two or more Take Profit orders are included in the smart order. When there is only one TP order, the Stop Loss will never move to the Average entry price, and will stay at its initial price throughout the trade.
The following table shows how the Stop Loss moves as each TP is reached, for both the Average Entry Price and Follow Take Profit TSLs.
Changes to Stop Loss price as each Take Profit is reached, for TSL:AEP and TSL:FTP
After entering the entry details, turn on the Stop Loss section of the Trading widget.
Select Market or Limit Stop Loss.
The selected Stop Loss type (Market or Limit) will be used both for the initial Stop Loss, and the Trailing Stop Loss
If a Stop Loss cooldown period is specified, this will be used for both the initial Stop loss and the Trailing Stop Loss.
Where a Limit SL is chosen, the difference between the Stop and Limit Prices will be used for determining the Limit Price for the initial Stop Loss and the Trailing Stop Loss.
An initial price is entered for the Stop Loss. If the price moves directly down from the entry, and the TSL is not triggered, then the Stop Loss will remain open in the original position. This provides risk protection from the outset.
The initial Stop Loss value must be between 0% and 99%
from the Protection dropdown list, select either Average Entry or FollowTake Profit
The Stop Loss starts at the initial price set in the Trading widget.
If there is more than one entry filled, the Average Entry Price will be adjusted after each entry. If Take Profit orders are "Entry %" type, they will also be adjusted with the AEP. Fixed Price Take Profit orders are not moved.
When the first TP order is filled, the Stop Loss is moved to the average entry price.
Note that the Average entry price includes the cost of fees, and these are usually added to the order fill price.
The Stop Loss does not move any further after this.
If the price reverses after reaching TP1 and before TP2 and the Stop price is reached, the exit order will be placed and the position closed.
PnL would depend on the number and proportions of the TP orders:
TP1 will have made a profit.
The Stop Loss at the entry price will usually make some loss: the Stop is triggered at AEP and the market or limit order is placed.
Depending on the relative sizes of the Take Profit targets, potentially the position would be closed with some profit even if the Stop Loss is hit.
If TP1 price is very close to the entry price, when the price reverses, if it is moving quickly, by the time the exit order is placed, the price could already be past the entry price (below the entry price, for a long position).
Some exchanges are slow to update balances and trades (Kucoin in particular). When the Stop Price is reached, the TPs are cancelled and the Limit or Market order is placed. If the balance is not available, the exchange will return an error: Insufficient Balance.
The Stop price will be moved to the entry price once TP1 has filled. When the Stop price is reached, a market or limit order is placed. In both cases there can be slippage, with the amount depending on the liquidity of the order book at that time. The PnL for the Stop L:oss is likely to be a negative amount, and with a thin order book, it can still be a considerable amount.A Limit order will limit the slippage to that percentage, but as with all limit orders, adds the risk that the order might not be filled.
The losses from the Stop Loss will be offset by positive PnL from TP1.
When the Stop price for a TSL is moved to the entry price, any remaining entries will never fill. They will be marked as Pending and their balances released. If the order is edited, those Pending entries will need to be deleted or moved above the Stop price.
Note that some exchanges do not process real market orders. For example, Gate.io substitutes a Limit order 10% from the current price to limit slippage to that amount. This can result in a partially filled order. Note that the unfilled part of the order is cancelled by the exchange and not placed as a Limit order in the Order Book (OB) Whereas if you specify a Limit order at -10% yourself, if 10% slippage is not enough for the order to be filled, a limit order would remain in the OB at -10%.
If a TSL is combined with a TTP, when the TTP is triggered, all Stop Losses are deleted, including TSLs.
Suitable when 2 or more TPs are included in the smart order. ( FTP with 2 TPs will work identically to TSL: AEP)
The Stop Loss starts at the set price and remains there until TP1 is filled.
Then it jumps to Entry Price, TP1 etc.following one step behind the TP.
As soon as TP1 is reached the Stop price moves to the Entry Price. From this point, the position should remain in profit1.
If the price continues to rise and further TPs are filled,the Stop Price continues to move up, locking in more profit.
Same as above, for AEP.
Also:
If the TP prices are close together, the position is more likely to be stopped out due to small price moves.
The risk of being stopped out sooner by a close SL is balanced by the reduced loss if the SL is triggered once is has been moved above the entry price.
Smart Orders: Trailing Stop Loss comparison
Smart Orders: Trailing Stop Loss: Follow Price
Contents
Description
Comparison between TSL: Average Entry Price and TSL: Follow Take Profit
Adding a TSL: AEP or FTP to your smart order
Execution
TSL: AEP
What you need to know for TSL: AEP
TSL: Follow Take Profit
What you need to know for TSL: FTP
Description
Once TP1 is filled, the Stop Loss moves to the Average Entry Price.
On some platforms this is called “move stop loss to breakeven”.
Both types are suitable when two or more Take Profit orders are included in the smart order. When there is only one TP order, the Stop Loss will never move to the Average entry price, and will stay at its initial price throughout the trade.
Comparison between TSL: Average Entry Price and TSL: Follow Take Profit
The following table shows how the Stop Loss moves as each TP is reached, for both the Average Entry Price and Follow Take Profit TSLs.
Changes to Stop Loss price as each Take Profit is reached, for TSL:AEP and TSL:FTP
| TP Target reached | TSL:Average Entry Price | TSL:Follow Take Profit |
|---|---|---|
| None | Original Stop Loss | Original Stop Loss |
| TP1 | Entry Price | Entry Price |
| TP2 | Entry Price | TP1 |
| TP3 | Entry Price | TP2 |
| TP4 | Entry Price | TP3 |
Adding a TSL: AEP or FTP to your smart order
After entering the entry details, turn on the Stop Loss section of the Trading widget.
Select Market or Limit Stop Loss.
The selected Stop Loss type (Market or Limit) will be used both for the initial Stop Loss, and the Trailing Stop Loss
If a Stop Loss cooldown period is specified, this will be used for both the initial Stop loss and the Trailing Stop Loss.
Where a Limit SL is chosen, the difference between the Stop and Limit Prices will be used for determining the Limit Price for the initial Stop Loss and the Trailing Stop Loss.
An initial price is entered for the Stop Loss. If the price moves directly down from the entry, and the TSL is not triggered, then the Stop Loss will remain open in the original position. This provides risk protection from the outset.
The initial Stop Loss value must be between 0% and 99%
from the Protection dropdown list, select either Average Entry or FollowTake Profit
Execution
TSL: AEP
The Stop Loss starts at the initial price set in the Trading widget.
If there is more than one entry filled, the Average Entry Price will be adjusted after each entry. If Take Profit orders are "Entry %" type, they will also be adjusted with the AEP. Fixed Price Take Profit orders are not moved.
When the first TP order is filled, the Stop Loss is moved to the average entry price.
Note that the Average entry price includes the cost of fees, and these are usually added to the order fill price.
The Stop Loss does not move any further after this.
If the price reverses after reaching TP1 and before TP2 and the Stop price is reached, the exit order will be placed and the position closed.
PnL would depend on the number and proportions of the TP orders:
TP1 will have made a profit.
The Stop Loss at the entry price will usually make some loss: the Stop is triggered at AEP and the market or limit order is placed.
Depending on the relative sizes of the Take Profit targets, potentially the position would be closed with some profit even if the Stop Loss is hit.
What you need to know for TSL: AEP
If TP1 price is very close to the entry price, when the price reverses, if it is moving quickly, by the time the exit order is placed, the price could already be past the entry price (below the entry price, for a long position).
Some exchanges are slow to update balances and trades (Kucoin in particular). When the Stop Price is reached, the TPs are cancelled and the Limit or Market order is placed. If the balance is not available, the exchange will return an error: Insufficient Balance.
The Stop price will be moved to the entry price once TP1 has filled. When the Stop price is reached, a market or limit order is placed. In both cases there can be slippage, with the amount depending on the liquidity of the order book at that time. The PnL for the Stop L:oss is likely to be a negative amount, and with a thin order book, it can still be a considerable amount.A Limit order will limit the slippage to that percentage, but as with all limit orders, adds the risk that the order might not be filled.
The losses from the Stop Loss will be offset by positive PnL from TP1.
When the Stop price for a TSL is moved to the entry price, any remaining entries will never fill. They will be marked as Pending and their balances released. If the order is edited, those Pending entries will need to be deleted or moved above the Stop price.
Note that some exchanges do not process real market orders. For example, Gate.io substitutes a Limit order 10% from the current price to limit slippage to that amount. This can result in a partially filled order. Note that the unfilled part of the order is cancelled by the exchange and not placed as a Limit order in the Order Book (OB) Whereas if you specify a Limit order at -10% yourself, if 10% slippage is not enough for the order to be filled, a limit order would remain in the OB at -10%.
If a TSL is combined with a TTP, when the TTP is triggered, all Stop Losses are deleted, including TSLs.
TSL: Follow Take Profit
Suitable when 2 or more TPs are included in the smart order. ( FTP with 2 TPs will work identically to TSL: AEP)
The Stop Loss starts at the set price and remains there until TP1 is filled.
Then it jumps to Entry Price, TP1 etc.following one step behind the TP.
As soon as TP1 is reached the Stop price moves to the Entry Price. From this point, the position should remain in profit1.
If the price continues to rise and further TPs are filled,the Stop Price continues to move up, locking in more profit.
What you need to know for TSL: FTP
Same as above, for AEP.
Also:
If the TP prices are close together, the position is more likely to be stopped out due to small price moves.
The risk of being stopped out sooner by a close SL is balanced by the reduced loss if the SL is triggered once is has been moved above the entry price.
Related Content
Smart Orders: Trailing Stop Loss comparison
Smart Orders: Trailing Stop Loss: Follow Price
Updated on: 14/07/2023
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